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Dollar Retesting the Top Side While Euro Keeps Falling

Envy can be a positive motivator. Let it inspire you to work harder for what you want. ~ Robert Bringle

Good morning. Sentiment remains unchanged across the board, euro and other risk pairs extending Friday’s sell-off.

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please elaborate your answer in the comments section below

USD Index

Recent top comes under pressure as the dollar extends gains in risk-off trade following Friday’s EU Summit. The rally corresponds to EURUSD’s retest of the bottom zone around 1.3150 (see EURUSD chart below)

USD Index Chart Daily 12-13-2011

EURUSD

The ugly turned uglier as the bottom around 1.3150 is under pressure. As mentioned yesterday – I’m expecting more downside, testing round support at 1.300 soon

Euro Vs US Dollar Chart Daily 12-13-2011

Zooming in the 1-h chart, we can consider the median retracement value of last down leg (from Friday’s top to current low) a decent point to sell into strength.

Euro Vs US Dollar Chart Hourly 12-13-2011

GBPCHF

Here’s what you can call an easy trade: just follow the rumors flow and don’t bet against the house. As much as I don’t like to quote myself, I do it because I know some people really love to trade against the wind:

Rumors of interventions continue to kick the CHF every time it gains ground – retesting recent bottoms against the EUR, GBP etc. Trading against a central bank’s plan is not the best idea. The house always wins. So, buying on the break of 1.44 looks like a good plan these days – December 2

and

No change of plan here, as the Swiss franc is getting hammered by circulating rumors of SNB’s interventions on a regular basis. Holding long with decent stops or buying on the break above 1.4380/00 are the only two bets I can think of. – December 5

So, selling at the “very top” while everyone and his dog was waiting for new SNB intervention, rumors, [insert here whatever events to weaken the CHF] was a foolish idea. Same as buying USDJPY every single day while it’s been falling for months

British Pound Vs Swiss Franc Chart 4hrs 12-13-2011

EURJPY

Support at 100 is likely the next objective as support formed by the rising trendline which is connecting recent higher lows was breached. Interim horizontal support formed by November’s bottom is currently being tested.

Euro Vs Japanese yen Chart Daily 12-13-2011

AUDJPY

One of the plans highlighted yesterday, which is to sell on the break below 78, seems quite reasonable which price continues to push on support at 78.

I don't think there's any reason to buy EUR anywhere, anytime soon, if you plan to hold the position for more than a few hours or days at most.
In order for EURUSD to reverse, something like the following should happen: a) something (no idea what) to save the eurozone – unlikely, there's no near term cure
b) something draws the attention from euro's condition to the dollar, so the pair will be all about the dollar once again (like it used to be before the eurozone crisis). What could that be? Well, QE3 is the first thing to come to mind. But, again, I wouldn't bet on that and rather follow the market. There's enough time to catch the next "wave" when things are going to be different

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